A frame grab taken from a video filmed by the SEMAR and released to Reuters on July 16, 2013 shows Miguel Angel Trevino. REUTERS/SEMAR/Handout via Reuters

MEXICO CITY (Reuters) - The dramatic capture of the boss of the Zetas drug cartel provides fresh evidence that Mexican authorities are starting to win their protracted fight against a gang that has done more than any other to stain the country’s name with its brutality.

But even with Miguel Angel Trevino now in custody, Mexican President Enrique Pena Nieto still has the difficult task of taming other cartels even as he creates a new militarized police force to take over the fight waged for years by the military.

The Mexican government said late on Monday it had arrested Trevino - also known by the alias Z-40 - in a raid near his hometown of Nuevo Laredo on the U.S. border.

In the past 10 months, three of the Zetas four most-wanted leaders have been killed or captured by Mexico’s armed forces, including the 40-year-old Trevino, whose younger brother Omar is now the only top-level member of the cartel still at large.

In the past three years, atrocities blamed on the Zetas have pushed Mexico’s conflict with drug gangs to new depths of savagery, making them the prime target of Pena Nieto’s efforts to restore order and end negative headlines about the drug war.

Even with a potentially crippling blow to a powerful cartel, Pena Nieto faces major challenges in his quest to pacify Mexico, where gang violence prompted some areas of the country to take the law into their own hands in the past year.

Sickening acts of violence like the beheading of 49 people near Monterrey last year and the mass slaughter of migrant workers in northeastern Mexico in 2011 and 2010 have earned the nation attention for all the wrong reasons, and contributed to the impression that authorities could not control the Zetas.

More than 70,000 Mexicans have been killed in drug-related violence since the start of 2007, when the government launched a military offensive to subdue cartels that make vast amounts of money funneling drugs including cocaine and marijuana into the lucrative U.S. market to the north.

‘A MAJOR BLOW’

“This is a major blow,” Alberto Islas, head of Mexico City-based consultancy firm Risk Evaluation, said of Trevino’s capture. “But as the Zetas are split into regions, they can still continue to function.”

The extent to which the Zetas can regroup will depend greatly on whether a new leader emerges from their ranks, with Omar Trevino a prime candidate, Islas said.

Trevino’s arrest - taken alive carrying $2 million in cash - pointed to an improvement in intelligence-gathering by Mexican authorities since Pena Nieto took over last December from his predecessor Felipe Calderon, Islas said.

Pena Nieto vowed to improve the use of intelligence in the fight. Trevino was captured without a single shot fired after his pick-up truck was intercepted by a navy helicopter.

Conscious of the damage the Zetas were doing to Mexico’s reputation, Calderon stepped up efforts to catch leaders of the gang, founded in the late 1990s by 14 former soldiers who were hired initially as enforcers for the then-powerful Gulf Cartel.

Over the years, the Zeta cartel became big enough to threaten the Sinaloa Cartel of Joaquin Guzman, aka “El Chapo,” Mexico’s most wanted man. By 2012, the Zetas and the Sinaloa cartel were considered the most powerful drug gangs in Mexico. Other smaller cartels maintained strongholds in certain areas.

Calderon’s military-led offensive proved costly. Killings from turf wars between the gangs and their clashes with authorities escalated after he took office in December 2006, rising above 60,000 by the end of his six-year term.

A frame grab taken from a video filmed by the SEMAR and released to Reuters on July 16, 2013 shows Miguel Angel Trevino. REUTERS/SEMAR/Handout via Reuters

After the Zetas went through a violent break-up with the Gulf Cartel - displacing it as the dominant gang in northeastern Mexico - they commanded more than 10,000 gunmen from Central America to the Rio Grande River marking the U.S.-Mexican border.

INTERNAL DISPUTE

Signs began to emerge last year that all was not well within the Zetas. Talk of an internal dispute surfaced, gathering pace with intelligence reports that some Zetas had massacred other members of the gang in the city of San Luis Potosi.

In the summer, banners accusing Trevino of being a “Judas” to then-Zetas leader Heriberto Lazcano began appearing in parts of Mexico. By early October, Lazcano was dead - shot by Mexican Marines - and Trevino’s internal rival in the gang, Ivan Velazquez, alias “El Taliban,” had been captured by the navy.

Since the start of this year, some towns ravaged by the Zetas have had increasing success in beating back the gang.

Improvement was noteworthy in places like the northern city of Torreon. Once cited as an example of Mexico’s progress from a poor agrarian society to a rising industrial power, it suffered a 16-fold increase in homicides after the Zetas arrived in 2007, turning it into one of the most murderous cities in the world.

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“Investment went down, bars and restaurants closed, and the night life came to an end,” said Mayor Eduardo Olmos, a member of Pena Nieto’s Institutional Revolutionary Party, or PRI.

Thanks to better investigative work and coordination, the Zetas are in retreat in Torreon, the mayor added. Olmos noted that murders in the city had fallen from around 115 in June 2012 to about 15 in June 2013.

Yet for all the optimism surrounding Trevino’s capture, about a thousand murders linked to organized crime have been registered across Mexico every month since Pena Nieto took over.

That is a bit lower than during Calderon’s presidency. But the run-up to local elections on July 7 was marred by the murders of several politicians, prompting one opposition lawmaker to call the campaign Mexico’s most violent ever.

Pena Nieto has announced plans to shift the responsibility for battling the cartels away from the military and into a new, militarized police force - known as the national gendarmerie.

But there is also uncertainty about how Pena Nieto plans to realize his vision of making the gendarmerie the new spearhead.

Few details of the plan have been made public. All that is clear is that the force will initially number only 5,000, way below the figure of 40,000 Pena Nieto had proposed last year.

With the gendarmerie still in an “embryonic state,” Guillermo Anaya, an opposition lawmaker who heads the committee for public security in the lower house of Congress, noted: “For now, the idea of taking the army and the navy back off the streets is unthinkable.”

Mexico may have to contend with renewed violence on the Zetas turf as Trevino’s lieutenants compete to succeed him after his capture in Nuevo Laredo.

On the sidelines, Mexico’s most powerful capo, Joaquin Guzman, will be looking to profit, said George Grayson, a Mexico expert at the College of William & Mary in Virginia.

“‘El Chapo’ is greatly strengthened because he will now have access to the crown jewel of narco-trafficking, Nuevo Laredo,” Grayson said.